feeding our future...foreign exchange rates; the company's sensitivity to inflationary and...

Building BetterFeeding America’s Retailers1

1

August 2020

Feeding Our Future


DisclaimerCertain information in this presentation and discussed on the conference call which this presentation accompanies constitutes forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. Statements regarding the Company’s business that are not historical facts are “forward looking statements” that involve risks and uncertainties and are based on current expectations and management estimates; actual results may differ materially. The risks and uncertainties which could impact these statements are described in filings that United Natural Foods, Inc. (the “Company”) has made under the Securities Exchange Act of 1934, as amended, including its Annual report on Form 10-K for the year ended August 3, 2019 filed with the Securities and Exchange Commission (the "SEC") on October 1, 2019, as updated in its Quarterly Report on Form 10-Q for the period ended May 2, 2020 and other filings the Company makes with the SEC, and include, but are not limited to, the impact and duration of the COVID-19 outbreak, the Company’s dependence on principal customers; the potential for additional asset impairment charges; the Company's sensitivity to general economic conditions, including changes in disposable income levels and consumer spending trends; the Company’s ability to realize anticipated benefits of its acquisitions and dispositions, in particular, its acquisition of SUPERVALU; the possibility that restructuring, asset impairment and other charges and costs we may incur in connection with the sale or closure of our retail operations will exceed our current expectations; the Company's reliance on the continued growth in sales of higher margin natural and organic foods and non-food products in comparison to lower margin conventional grocery products; increased competition in the Company's industry as a result of increased distribution of natural, organic and specialty products, and direct distribution of those products by large retailers and online distributors; increased competition as a result of continuing consolidation of retailers in the natural product industry and the growth of supernatural chains; the Company's ability to timely and successfully deploy its warehouse management system throughout its distribution centers and its transportation management system across the Company and to achieve efficiencies and cost savings from these efforts; the addition or loss of significant customers or material changes to the Company’s relationships with these customers; volatility in fuel costs; volatility in foreign exchange rates; the Company's sensitivity to inflationary and deflationary pressures; the relatively low margins and economic sensitivity of the Company's business; the potential for disruptions in the Company's supply chain or its distribution capabilities by circumstances beyond its control, including a health epidemic (such as the recent outbreak of COVID-19, or the novel coronavirus); the risk of interruption of supplies due to lack of long-term contracts, severe weather, work stoppages or otherwise; moderated supplier promotional activity, including decreased forward buying opportunities; union-organizing activities that could cause labor relations difficulties and increased costs; and our ability to identify and successfully complete asset or business acquisitions. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. The Company is not undertaking to update any information in the foregoing reports until the effective date of its future reports required by applicable laws. Any estimates of future results of operations are based on a number of assumptions, many of which are outside the Company's control and should not be construed in any manner as a guarantee that such results will in fact occur. These estimates are subject to change and could differ materially from final reported results. The Company may from time to time update these publicly announced estimates, but it is not obligated to do so.

This presentation also contains the non-GAAP financial measure adjusted EBITDA. The reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure is presented in the appendix to this presentation. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. The Company believes that presenting non-GAAP financial measures aids in making period-to-period comparisons, assessing the performance of our business and understanding the underlying operating performance and core business trends, and is a meaningful indication of its actual and estimated operating performance. The Company's management utilizes and plans to utilize this non-GAAP financial information to compare the Company's operating performance during certain fiscal periods to the comparable periods in the other fiscal years and, in certain cases, to internally prepared projections.

No manipulating or editing of this material is permitted.


UNFI at a glance

In Food Distribution, Scale Wins

Do the right thingPut safety and integrity

at the forefront of everything we do

Find the sweet spot

Be flexible and make change work

Feed the planet

Better food comes from a healthy planet

and we do our part

Deliver together

Empower each other and win as a team

suppliers15,000

distribution centers59

unique SKUs –broad assortment250K+

cases delivered in 2019 – 3M cases/day

1.3B

network, capacity, buying power & proximity to customers

the right products at the right time

product integrity & food access

making food available to more people in more places

more choices, new & now, local & regional

customer locations30,000

Last Four Quarters (1)

Net sales $25.2 billion

Adjusted EBITDA

$641 million--->

(1) 53 weeks ended May 2, 2020; see reconciliation of Adjusted EBITDA in the appendix.

--->


Building a better future through a culture of shared beliefs

Our Values Drive Everything We Do

Do the right thingPut safety and integrity

at the forefront of everything we do

Find the sweet spot

Be flexible and make change work

Feed the planet

Better food comes from a healthy planet

and we do our part

Deliver together

Empower each other and win as a team


Long History of Growth

($’s in millions)

FY08 to FY18 CAGR ~ 11.8%

Net Sales Adjusted EBITDA (1)

FY08 to FY18 CAGR ~ 11.7%

Double digit annual growth in sales and Adjusted EBITDA amplified by FY19 SUPERVALU acquisition

(1) See reconciliation on page 25.


Differentiated business model with scale uniquely positions UNFI to capitalize on growth trends

Feeding America’s Retailers Through Scale and Innovation

Why UNFI

$515$540

$567

$593$583

$598

$629$650

$663

$688 $698$708

$734

$764$787

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

CAGR: 3.1%

Food at home is a stable and growing sector ($’s in billions)

Unmatched variety of both natural and conventional products

Coast-to-coast distribution center network

Growing suite of innovative professional services

Steadily decreasing ratio of net debt to Adjusted EBITDA

Source: United States Department of Agriculture (USDA)


UNFI has meaningful opportunity with < 20% of the addressable market (1)

Fragmented US Food Market With Share Upside

Growth with top 10 retailers:

Proprietary internal data improves assortment

Fostering success of new brands

Reliable operations during volume spikes (COVID-19)

New business acquisition:

Unmatched product assortment

Lower cost to serve

Streamlined operations with fewer deliveries

(1) Company estimate

$130 BillionAddressable

Market(Within Existing Channels)


Scale Provides a Competitive Advantage To UNFI and Customers

(1) On December 10, 2019 C&S announced Ahold Delhaize USA will be acquiring three C&S distribution centers as Ahold Delhaize USA transitions to a self-distribution supply chain network over the next three years.C&S is presented as a proforma estimate following the Ahold Delhaize transition.

Source: Supermarket News – 2019; company estimates.

UNFI’s significant scale provides….

UNFI Benefits Customer Benefits

Widest selection Able to provide a greater percentage of store’s product

Lower prices from consolidated purchases and back-of-house savings (receiving, stocking, AP etc.)

Coast-to-coast distribution network

Lower cost to serve Faster delivery times

Larger, fewer drops Higher margins Lower labor costs

Supplier leverage Lower acquisition cost

Lower cost of goods

Investments in technology

Productivity gains Lower cost of goods

2019 Revenue ($’s in billions)

$21.7*

UNFI Is The Largest U.S. Wholesaler

(1)


Network of 59 distribution centers in close proximity to 80%+ of the U.S. population

• Smaller customers benefit from proximity to distribution centers and next day deliveries

• National chains can streamline costs by using single national distributor

Continued investment in innovation• 40% of distribution centers have some level of

automation or mechanization, driving expense savings

Broadest national footprint puts UNFI closest to customers

Only Food Wholesaler With Nationwide Distribution Coverage


More than 250,000 SKUs across the store

Largest Product Offering in North America Food Wholesale

Category Growth

Conventional 9.5%

Natural 10.7%

Specialty 8.3%

Services

Protein / Produce 9.8%

Deli 3.6%

Private Brands > $1B 7.2%

eComm 40%

Growth rates: UNFI calculations on Growth Rate based in part on Nielsen data Total

US Food for 52 weeks ended 6/27/20; eComm is 2020 estimate per Coresight

Research.

Unmatched Offerings Set UNFI Apart


Well positioned to participate where shoppers drive demand

Diversified Customer Base Spanning All Segments

Natural Premium Value

Conventional Ethnic eComm

Diverse Customer Base Representing All Channels

34%30%

19% 17%

C&S Kehe UNFI SPTN

Top Customer Concentration (% revenue from largest customer)

UNFI’s largest customer under contract through October 2025

Source: Company filings, F&D Reports; C&S prior to Ahold Delhaize transition .


Estimated $100 billion shift in March – June food spending

Benefitting From Favorable Food-At-Home Trend

UNFI captured $1 billion of food-away-from-home spending in early stages of COVID

Strong Q3 leverage as net sales grew 12%; Adjusted EBITDA grew 32%

Favorable trends expected to moderate but remain a tailwind as majority of consumers plan to spend more on food at home post COVID (1)

(1) Piper Sandler survey

Where Americans Consume Food

Each percent shift is worth approximately $10 billion in annual supermarket sales

Source: US Census Bureau


Path To Grow: Cross Selling

9 of 10 top customers now use UNFI as both their primary natural and conventional distributor

On track for more than $200 million of cross selling sales in fiscal 2020

(1) SPINS data: Natural Products $ Growth by Department vs. a year ago (52 Weeks Ending 04/19/20 )

Professional Services

NaturalConventional

Private Brands

Meat

Natural and organics products

UNFI has unique opportunity to grow with current customers and attract new customers

8.9% growth of Natural and organic products in conventional stores (1)

Natural penetration ~ 1% compared to conventional ~ 12%

Natural services penetration less than 5% of conventional

Natural penetration < 5% compared to conventional ~ 15%

Natural produce penetration ~ 7% with goal of 12%

Conventional produce penetration ~ 4% with goal of 12%

Approximate Annual Sales Opportunity

$250M

$250M

$175M

$250M

$100M

Total > $1 billion


$2 billion retail portfolio with room to grow

Opportunity to Grow Private Label

11.8

88.2

17.9

82.1

PL Sales+8.7% vs LY

Private Label penetration

PL Sales

+8.9% vs LY

Woodstock

Culinary Circle

Essential Everyday

#2

#3

#1

Cheese brandin UNFI supplied

conventional stores

Benefits of Innovative Private Label Program

Period : Latest 52 W/E 05/02/20

(1) Q3 FY’20, 13 Weeks ending May 2, 2020

(2) UNFI calculations based in part on Nielsen data Total

Enterprise Private Label Gap 06/2020

• 5,000 items across 200 categories in 20 brands creates differentiation and consumer loyalty

• Portfolio growth strategy underway with pricing upside and opportunity to invest in innovation across key brands

200Basis Pts to UNFI

Gross margin benefit

UNFI Conventional Customers

(2)

Remaining Market Food

(2)

Private Label penetration

Path To Grow: Private Brands

Frozen vegetables brandin UNFI supplied natural

stores

Pizza brandin UNFI supplied

conventional stores

Field Day

#6 Center store brand

in UNFI supplied natural stores

UNFI’s Brands+ sales increased 26% in most recent quarter (1)


Path To Grow: Professional ServicesInnovative solutions drive margin accretive business

15

• Easy to administer

• Faster reimbursement improves customer cashflow

• UNFI brings best fitting technology solutions to each store

• Lowers customer costs

• Kept abreast on technology changes

• Drives traffic into customer stores

• Creates shopper loyalty

• Increases sales

• Lower costs by leveraging UNFI scale

• Broad range of solutions help diversify store offerings

• Allows customers to create competitive advantages

Coupon Services

Retail Technology & Payments

Consumer Marketing

Consumer Services

Used by 75% of conventional customers / 5% of natural customers, with significant room to grow


UNFI has multiple paths to increase its ~$325M annual sales within the fast growing eCommerce space

Path To Grow: eCommerce

TraditionalGrow traditional eCommerce customers (Vitacost, Fresh Direct, Amazon)

In 2015, 15% of consumers had purchased groceries online. In 2020, that number has increased to 55%(1)

This growth contributed to a 76% increase in UNFI’s eCommerce in Q3 of Fiscal 2020

TransactionalGrow UNFI Easy Options, a business-verified buyer's site for retailers, eTailersand other small to medium size businesses

TransitioningGrow turnkey platform for traditional customers working to offer eCommerce to their shoppers (Instacart partnership)

(1) RBC Capital

Building BetterFeeding America’s Retailers

Retail Adjusted EBITDA Trend1

17

Retail Business Delivering Strong Operating Results

• Largest supermarket chain in Minneapolis-St. Paul with market share of 26%, up from 24% a year ago

Delaying divestitures for up to 24 months to capitalize on strong currents trends in light of softer M&A markets

• Approximately half of stores have been sold/closed to date, including majority of unprofitable stores

($’s in millions)

(1) See slide 23 for reconciliation; excludes corporate allocations.

$20.4$22.1

$48.8

Q1FY20 Q2FY20 Q3FY20


Steadily Reducing Debt

$705M of cumulative net debt reduction since Supervalu acquisition

Face value net debt / LFQ Adjusted EBITDA1

($’s in millions)

(1) Net debt, as shown, divided by last-four-quarter adjusted EBITDA of $598, $587, and $641, respectively. See slide 24 for reconciliation of Adjusted EBITDA.

Committed to further debt reduction as cornerstone of capital allocation strategy

5.4x 5.2x 4.3x


GovernanceEnvironmental

19

UNFI is committed to upholding its ESG principles

Continued Focus on ESG

• 6th consecutive year on Food Logistics Top Green Provider list

• LEED® and solar-powered buildings more efficient and better for associates and environment

• Regular cycling of delivery fleet improves efficiency, lowers costs and protects the planet

• Joined the Climate Collaborative in 3rd quarter

• Board diverse by gender (30% women) and race/ethnicity

• Best practices include annual elections, one voting class, 3/3/20/20 proxy access, majority voting, special meeting rights at 25%, director retirement age, regular refreshment, annual board evaluations, no poison pill

• Executive compensation reflects pay for performance philosophy

• Reference leading reporting frameworks, SASB and GRI in our reporting

• Invested in safety of distribution networks

• 80% of food waste diversion through donations

• 69 grants totaling $1 million from UNFI Foundation

• Committed to racial equality through pillars of action toward our people, our communities, and our world

See UNFI’s 2019 Corporate Social Responsibility Report

Social

“Better food can only come from a healthy planet. UNFI is doing its part to ensure that future generations have access to clean air and water, and a safe and nutritious food supply.“

Alisha Real, Sr. Sustainability Manager

Shaping The Foodscape For A Better Future


Delivering growth and shareholder value

Key Areas of Focus

Capitalize on multiple opportunities to increase sales and market share

• Cross selling

• Private brands

• Professional services

• New customer acquisition

Increase Adjusted EBITDA

Reduce Net Debt

Drive Sales

1

2

3

Increase Adjusted EBITDA margin through sales leverage and productivity initiatives

• Recent surge in volume proves network capable of handling higher sales volumes

• Continue network optimization work including facilities and inventory management

• Deliver cost synergies

Generate cash to further reduce net debt

• Cash from operations

• Asset sales


Thank youRegional Offices

313 Iron Horse Way, Providence, RI 02908

11840 Valley View Rd, Eden Prairie, MN 55344

21


It takes leadership, vision & bold actions

Better is a Constant Pursuit

22

Haddon House, Nor-Cal Global Organics & Gourmet Guru

UNFIMountain People’s Warehouse

Select Nutrition

Millbrook Distribution

Honest Green SUPERVALU

Woodstock Farms LLC& Albert’s Organics

1970 19901980 2000

Tony’s Fine Foods

2010 2012 2014 2016 2018

Emergence Organic & Natural eGrocery

Full assortment

New & NowG & E, local

Perimeter Fresh& transparency

Organic goesmainstream Non-GMO

John HowardChief Financial Officer

Steve SpinnerChief Executive Officer & Board Chairman

Danielle BenedictChief Human Resources Officer

Jill SuttonChief Legal Officer & General Counsel

Jack ClareChief Information Officer

Chris TestaPresident

Jim GehrChief Supply Chain Officer

Mike StigersChief Executive Officer, CUB

significant industry experience & expertise

Eric DorneChief Operating Officer

Paul GreenPresident, UNFI Fresh

Amanda HelmingChief MarketingOfficer


GAAP to Non-GAAP ReconciliationsLast six quarters

23

We define Adjusted EBITDA as a consolidated measure inclusive of continuing and discontinued operations results, which we reconcile by adding Net (loss) income from continuing operations, plus Total other expense, net and (Benefit) provision for income taxes, plus Depreciation and amortization calculated in accordance with GAAP, plus non-GAAP adjustments for Share-based compensation, Restructuring, acquisition and integration related expenses, goodwill and asset impairment charges, certain legal charges and gains, certain other non-cash charges or items, as determined by management, plus Adjusted EBITDA of discontinued operations calculated in manner consistent with the results of continuing operations, outlined above.


GAAP to Non-GAAP ReconciliationsRolling last four quarter Adjusted EBITDA


GAAP to Non-GAAP ReconciliationsHistorical Adjusted EBITDA

feeding our future...foreign exchange rates; the company's sensitivity to inflationary and...

Documents